Marketing Is NOT NECESSARY at Private Clubs (Common reasons cited by Board of Directors, Members and some Managers)

1
Marketing Is NOT NECESSARY at
Private Clubs (Common reasons cited
by Board of Directors, Members and some Managers)

• This club should be exclusive, we dont want
  everyone having access to the club
• Members will think the club is in trouble. It
  will no longer be PRIVATE!

2
Marketing Is NOT NECESSARY at
Private Clubs (cont.) (Common
reasons cited by Board of Directors, Members and
some Managers)

• We dont want the club to be over crowded. We
  like to play golf without reserving a tee time or
  having to reserve a time one or more days in
  advance!
• If we have a lot of business in the dining room,
  we wont get the individual attention and service
  we expect at a private club!

3
Barriers to Membership Marketing in Private Clubs

• Board of directors reluctant to market clubs
• Dont want to upset long time members who cling
  to tradition of the club not marketing itself
• Marketing is a new area for clubs
• only in the last decade

4
Barriers to Membership Marketing in Private Clubs
(cont.)

• Experienced managers are unfamiliar with
  marketing strategies and what works in private
  clubs
• If they are not Standing In Line to dine at
  your club or use the other facilities you need to
  market!

5
Four Ps of Marketing

• Product
• Type of Club
• Quality
• Type and number of services, amenities, etc.
• Price
• Cost of Membership
• Initiation fee, equity portion, dues, menu
  prices, etc.
• Free service vs. fees per use items

6
Four Ps of Marketing (cont.)

• Promotion
• Internal advertising to promote more member usage
• Public relations to create image of good citizen
  in the community
• External strategies to create awareness of Club
  for more Members
• Place
• Location of the Club - Demographics of the area,
  Number of Businesses, Competitors, etc.

7
Trends for Private Clubs

• Most clubs do not have a waiting list for all
  categories of memberships (78)
• Clubs are using more assertive techniques to
  pursue more member or to keep their waiting list
  stocked with prospects
• Clubs are offering more membership categories in
  order to increase and retain members

8
Trends for Private Clubs (cont.)

• Clubs are changing policies to make membership
  more attractive to different groups, e.g. women
  members allowed to play golf on weekend mornings
• Many clubs are pursuing revenues from different
  sources
• Unrelated business income
• Non-traditional income
• Clubs are using more assertive techniques to
  pursue more banquet and catering business

9
Trends for Private Clubs (cont.)

• A concern that unrelated business income may
  exceed 15/35 of the clubs revenue
• The IRS has indicated that the insignificant
  level for non-traditional income is 5 of the
  clubs total revenue
• With more families having dual income earners,
  there is a need for members to spend any free
  time they have with their families, including
  club usage

10
Trends for Private Clubs (cont.)

• Health fitness is no longer a fad, but a
  lifestyle for many especially the baby boomers.
  Clubs will need to add program, facilities, and
  items on the menu to accommodate this trend
• There are more members at private clubs than ever
  before, but the supply of new clubs has exceeded
  the demand or number of new members

11
Trends for Country Clubs

• Golf is the most important activity to members
  and the activity most often participated in at
  the club
• Golf is the number one reason cited by members
  for joining the club
• Slow play is a significant concern among members,
  yet they want usage by family members to increase

12
Trends for Country Clubs (cont.)

• Clubs are reporting more outside rounds, which is
  attributed to more outside tournaments
• Although participation in tennis and swimming is
  much lower than golf, members cited these areas
  as an important reason for joining, especially
  for the family members

13
Trends for Country Clubs (cont.)

• Non-golf activities (swimming, tennis and family
  programs) are more important to younger members
  (baby boomers) than older members
• Full service, state of the art exercise/fitness
  centers are being added by many clubs, not just a
  small room with a few pieces of equipment

14
Importance of Marketing

• Survey conducted by CMAA (Club Managers
  Association of America) of its members found
  that club managers thought
• Marketing was a high priority
• Selling memberships was very important
• Private clubs are experiencing a declining
  membership base nationwide

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Reasons For Decline In Membership Size at Clubs

• Aging Membership
• Many clubs had a closed membership during the
  70s and 80s
• 40 year olds (prime time to join a private club)
  were not replaced
• Members at these clubs are now in their 60s and
  70s

16
Reasons For Decline In Membership Size at Clubs
(cont.)

• Different Preferences for Baby Boomers
• Clubs with a gray or blue haired impression
  are not attractive to potential 40 year olds
• Preference for more casual dining than formal
• Social tradition is not as important to this
  market
• Economic Downturn Across the Country
• Businesses cutting back on entertainment
  expenses
• Businesses closing or cutting management
  positions (potential members)

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Reasons For Decline In Membership Size at Clubs
(cont.)

• Tax Law Changes
• Entertainment expenses initially decreased from
  100 to 80
• 1994 changes entertainment is now only a 50
  deduction and dues are no longer
• Overbuilding of Private Clubs
• Real estate developments (country clubs)
• Office buildings (city city/athletic clubs)

18
Reasons For Decline In Membership Size at Clubs
(cont.)

• More Competitors
• More upscale and quality restaurants available,
  giving members an alternative for upscale dining
• Hotels, convention facilities, and restaurants
  offering better banquet facilities and service

19
Reasons For Decline In Membership Size at Clubs
(cont.)

• More Competitors (cont.)
• High end daily fee golf courses
• Provide high quality services once only available
  at private clubs
• Course conditions comparable to private clubs and
  in some cases better
• Target market is avid golfers with high standards
  which has been the market for country clubs
• These for profit businesses can and are much more
  aggressive in marketing their product than clubs
  are allowed to

20
Methods to Increase Membership

• Decrease initiation fees and or dues
• Appropriate only if pricing is not in line with
  the Clubs position in the market place
• Temporary price reduction during special programs
• Members only refer friends when a special is
  being offered (Cherry-Pickers)

21
Methods to Increase Membership(cont.)

• Incentives used for Member referrals
• Repeat usage sends a message the Club is in
  trouble
• Rely on Membership Committee to be aggressive in
  pursuing more Members
• They are use to being only processors of an
  application, not in identifying candidates for
  membership

22
Membership Director

• Facilitates Members with the referral process
• Takes over the administrative responsibilities
• Collects paperwork application, letters of
  recommendation, etc.
• Sends materials, brochures, etc. to candidates
• Gives tours of the Club
• Follows up on applicants to ensure they join

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Membership Director(cont.)

• Helps in identifying candidates guests,
  executives, professionals, etc.
• Helps in matching up prospects with Members that
  may know or willing to sponsor them
• Implements more aggressive strategies if Member
  referral programs do not work

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Research Project

• Questionnaire sent to 400 GMs nationwide that
  were members of CMAA
• Questions on marketing and membership activities
• 226 respondents - 57 response rate
• Respondents were from 42 different states
• Only 22 of the clubs had a waiting list for
  membership

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Waiting List Information

• Clubs With a Waiting List (22)
• 49 Clubs (22 of 226) had a median of 30
  individuals on their waiting list
• 59 of the Clubs (29 of 49) with a waiting list
  reported their full or regular membership only
  had the waiting list (13 of all clubs)

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Waiting List Information(cont.)

• Clubs With a Waiting List (cont.)
• Only 41 of the Clubs (20 of 49) with a waiting
  list reported that all of their membership
  categories were full (9 of all clubs)
• Clubs Without a Waiting List (78)
• Median number of memberships still available at a
  club was 34

27
Clubs With A Membership Director

• Clubs with a membership Director 37
• Number of Membership Positions (83 of 226 Clubs)
• One 63
• Two 19
• Three Plus 18

28
Clubs With A Membership Director (cont.)

• When the Position Was Created (83)
• Less than one year ago (13) 16
• One to three years ago (21) 24
• Three to five years ago (12) 15
• More than five years ago (37) 45
• Only 16 of all clubs (226)
• 21 of all clubs have added a membership position
  in the last 5 years

29
Position Type

• Full-time 72
• Responsibilities exist in another department
  12
• Part-time (less than 30 hours) 6
• Volunteer, board or club member 10

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Compensation

• Median total compensation
  30,001 to 40,000
• Median base salary
  20,001 to 30,000

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Compensation (cont.)

• Financial Incentives Reported
• Commission based on number of new
  memberships 55
• Commission based on initiation fees
  generated 43
• Commission based on dues revenue
  generated 32
• Commission based on total club sales 11

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Marketing Activities

• 83 - Members contacted for referrals
• 52 - Host member-guest parties
• 37 - Attend local community meetings for
  networking, i.e. rotary, etc.
• 25 - Direct mail to prospects, inquirers

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Marketing Activities(cont.)

• 24 - Acquire mailing lists of new residents and
  professionals
• 16 - Acquire lists of tenants, corporations and
  companies
• 11 - Purchase mailing lists from professional
  associations groups

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Implications

• Private clubs have started to market themselves
  only recently, to compete with For-Profits and
  other clubs
• It will be common in the future for many private
  clubs to hire a membership director

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Implications (cont.)

• Membership directors primary role will be to
  identify prospects and make some type of contact
  with them and not just process membership
  applications
• Clubs are currently implementing a variety of
  external marketing activities and that will
  increase in the future